A successful relationship with the right coin dealer is an essential component in the enjoyment of coin collecting. The collector who chooses to "go it alone" may be setting himself up for some serious problems, even if he is well-connected and knowledgeable. A client (and friend) of mine recently coined a phrase that I feel succinctly describes the ideal relationship between the collector and dealer: the "dealer-partner." The relationship between a dealer such as myself and my clients is mutually enhancing. I sell my nicest coins to my best customers and, in turn, will hopefully be able to reacquire these coins in the future. My clients buy nice coins at fair prices, acquire important insider information and market insights and, literally, put bread on my table.
When deciding on the "right" dealer, I would suggest that you think carefully about the following:
1. How much does the dealer know about the area that you wish to specialize in?
If a collector called and told me he wished to put together a set of Lincoln Cents, I'd probably recommend that he choose someone else. I think I have a great eye and I probably know more about Lincoln Cents than most collectors. But I'm not what I'd call an expert in this area. On the other hand, if a collector called me and said he wanted to put together a set of Charlotte gold coins, I could state with honesty that there is probably no better dealer to work with than me. The collector needs to choose a dealer who really knows an area. That's one reason why I have always respected specialized dealers and it's why, some twenty years ago, I made the decision to be one.
2. What are the dealer's credentials within the numismatic community?
It can be hard to determine how well respected a dealer is within the numismatic community, given the fact that many dealers are not quick to compliment their competition. If I were a collector, I'd want my dealer to have the following qualifications.
First and foremost, I'd want him to be a member of the Professional Numismatist Guild (PNG). There are fewer than 500 dealers worldwide in the PNG and it is the only significant numismatic organization that doesn't admit everyone who applies.
Secondly, I'd look for a dealer who is stable. If he has worked for three firms in five years, that's a red flag.
Thirdly, I'd want to deal with an individual who was a proven expert. Has he written books or articles? Is he a contributor to the Redbook or other pricing guides? Do experts respect his opinions? A dealer who is universally respected and who has the credentials to back up this respect is a good person to do business with.
3. Does the dealer go to coin shows and auctions?
Unless a dealer attends shows and auctions, he will be "behind the curve" when it comes to knowing current market conditions. Dealers who get second hand information and pass it onto to their clients are not nearly as helpful as dealers who are out doing battle on the frontlines of coin shows and auctions.
4. Does the dealer actually enjoy working with collectors?
Some of the most knowledgeable dealers are primarily wholesalers who do not have the personality or available time to work with collectors. These are not going to be good people to work with due to their inaccessibility and lack of enthusiasm. But don't totally rule out one of these wholesale specialists as their knowledge tends to be far greater than the "typical" retailer.
5. Does the dealer own his inventory or broker it?
I have nothing against the concept of brokering coins. In fact, there are times when I wish I could take the considerable amount of money I have tied up in my inventory, place it in a money market account, collect interest and sell other people's coins. But I am a firm believer in putting my money where my mouth is. Every coin that is in my inventory has first been sold to a very strict set of eyes: mine. People who are coin brokers have often never seen the coins that they are selling. In addition, since they do not have their own money and/or time invested in the coins, they tend to be less concerned with their appearance.
6. Will you have too much competition for the coins the dealer buys?
Let's say that you are a Charlotte quarter eagle collector who wants to put together a world-class set. You should ask a potential dealer if there are other existing collectors in this dealer's base who collect the same coins. Will there be situations when the dealer will have to make hard decisions about which collector gets which coin? If so, how will the dealer make these decision? As a rule, truly choice and/or rare coins are scarcer than the collectors who want them. Will you be able to get first shot at the coins that mean the most to you?
7. Does the dealer make a two way market?
The best coin dealers are those who make strong two way markets in the areas they specialize in. They will be anxious to repurchase the coins they have sold you and will tend to be stronger buyers than non-specialists. It's easy to find dealers who only want to sell you coins. It's much harder to find dealers who want to buy them from you.
8. Does the dealer offer "post-sale service?"
Good coin dealers don't disassociate themselves from a collector after they've made a sale. Services that many dealers offer include giving advice on when to buy, sell or hold, upgrading coins or crossing them from one service's holder to another, letting you know if someone else is interested in a coin you own and getting you a discounted seller's commission should you decide to place your coins in an auction.
9. Is the dealer someone you like and trust?
This is an especially important question, in my opinion. If you are going to spend a lot of money with someone, you had better trust them. And if you are going to have a mutually beneficial long-term relationship, you'd better like them. If a certain dealer "gives you the willies" every time you speak to him, then you probably shouldn't consider giving him your business; no knowledgeable or well-connected he is. Conversely, if you really like someone and they give you a warm, fuzzy glow when you speak with them, they might be a better dealer for you than someone who is more knowledgeable and better connected.
In summary, you should ask the following questions to any dealer that you are thinking of doing a significant amount of business with:
Do you really know the series that I collect?
How long have you been in business?
How many years have you been at your current address?
Do you attend shows and auctions?
Have you written articles or books about coins?
Do you belong to the PNG?
Are you a retail or wholesale dealer?
Do you own your inventory or broker other peoples coins?
How many other important collections have you built?
Will you be as anxious to buy my coins as you are to sell them to me?
What will you do for me after you've sold me coins?
What can you do to earn my trust?
The following are red flags that might make you think twice about doing business with a dealer:
He has worked for numerous companies in a short period of time
He has been in the coin business for a shorter period of time than you've been a collector (nearly all of the really great coin dealers have been in the coin business since they were teenagers)
He goes to fewer than three to five coins shows per year
He has never bought and sold coins in the series that you collect
He has no inventory of his own
His level of knowledge does not seem much greater than your own